Donimos Financial Statement Accounting Analysis

Domino’s Financial Statement Analysis
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Strategy analysis
Business model
Domino’s focuses on delivering high quality and fresh foods especially pizzas to customers quickly and safely and relying on superior service delivery (Dominos, 2017). The company has entered into franchise agreements with restaurants to expand the business operations in the domestic and international markets. The company experienced growth, even after the 2008/2009 financial crisis highlights the importance of the deliveries to improve profitability. Additionally, the company has cost-efficient stores that have made it easier to maintain high profitability levels.
Company/ Industry Overview
Domino’s Pizza is a piazza delivery company serving customers in the US and the international market, and the company has a third segment the Supply Chain segment. The company has increasingly relied on digital growth to remain competitive and reach out to more consumers (Banjo, 2016). Similar to other players in the food and retail market, energy and food prices affect the industry’s operations regularly. The rise of prices in raw materials is a concern even as energy costs have been low in the last three to four years. Restaurant spending also affects the industry and as the price of ingredients fluctuate this affects the businesses, and they may be forced to change prices more than is necessary
The major market players have franchise that run independent businesses using the main company’s brand name. Growth in the international market will cushion the industry from market slow down, but there is still concern that changing consumer preferences will impact negatively on the company’s operations in the US (Canadean Company Reports, 2016). Increased global food consumption is an opportunity for the food and restaurant market players to expand in markets of operations.
Another risk to the business is fewer people choosing to visit restaurants, and while some eat outside the establishments they are less likely to be loyal customers. The challenge then is how to reach to customers who meet outside orders. There are various outlets for takeouts and companies with delivery options are more likely to be competitive. Consumers choose different restaurant outlets sometimes without being aware of the nutritional content of the foods even as there is increased public interest on consuming nutritious diets (Brindal, Wilson, Mohr, & Wittert, 2014). Generally, the food and restaurant industry is competitive, and players need to be innovative to attract more customers.
Accounting Analysis
The management at Domino’s evaluates the estimates of assets, liabilities, revenues as well as expenses while disclosing contingent assets and liabilities. The company reports on an ongoing basis and estimates on revenue recognition are based on historical experiences and assumption made based on the circumstances. The company earns revenue through the domestic owned company and the franchise, the manufacturing, the supply chain segment and the international business (SEC, 2017). However, the sales from franchise stores are not included in the Company revenues, but when the company-owned stores r...